Answer :
Answer:
this year's depreciation using the revised amounts and straight line method is b. $23,300
Explanation:
Straight line method of depreciation charges the same amount of depreciation over the useful life of an asset.
Depreciation Charge = Cost - Residual Value / Number of Useful Life
Year 1
Depreciation = ($60,000 - $3,000) / 10 years
= $5,700
Year 2
Depreciation = $5,700
Year 3
Adjust the depreciation as follows:
(1) Adjust the depreciable amount (cost - residual value)
(2) Adjust the number of useful life
Depreciation = (Cost - Sum of Previous depreciation charges - New residual Value)/ Remaining Useful Life
= ($60,000 - ($5,700+$5,700) - $2,000) / 2 years
= $52,000/2 years
= $23,300
Answer:
b. $23,300
Explanation:
Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.
It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset.
Mathematically,
Depreciation = (Cost - Salvage value)/Estimated useful life
= ($60,000 - $3,000)/10
= $5,700
Accumulated depreciation after 2 years
= 2 × $5,700
= $11,400
Hence the netbook value after 2 years
= $60,000 - $11,400
= $48,600
Given that the remaining useful life of the asset was only 2 years with a residual value of $2,000,
Depreciation = ($48,600 - $2,000)/2
= $23,300